CEO Compensation: Too Much is not Enough !

This paper conducts an analysis of the relationship between CEO compensation and managerial performance on a large panel of US public firms, by taking into account the different components of CEO compensation. We estimate a stochastic frontier model in which managerial performance is related to compensation components. We find a positive and significant influence of CEO compensation on managerial performance, with a differentiated impact for components of compensation. We show that increases in salary, bonus, and options grants tend to enhance managerial performance. Our findings tend therefore to support the view that compensation contracts can be designed to increase managerial performance.Executive compensation, corporate governance, stochastic frontier.

Associate Professor Turnover at America’s Public and Private Institutions of Higher Education

This paper uses data from the American Association of University Professors annual salary survey to compute continuation rates for associate professors at American colleges and universities during the 1996-97 to 2001-2002 period. Findings demonstrate that average continuation rates are higher for private academic institutions than for public academic institutions in bachelors-level, masters-level and doctoral-level institutions. Multivariate analyses indicate that the average level of faculty compensation at an institution is an important predictor of the continuation rate. All other things held equal, institutions with higher average faculty compensation have higher continuation rates. However, the magnitude of this relationship is not sufficiently large enough to warrant change in compensation policies at academic institutions, particularly between public and private institutions. The benefits associated with raising average faculty compensation to increase the tenured faculty’s continuation rates at public universities are unlikely to match or exceed the costs of doing so

Breakdown of Kinetic Compensation Effect in Physical Desorption

The kinetic compensation effect (KCE), observed in many fields of science, is the systematic variation in the apparent magnitudes of the Arrhenius parameters $E_a$, the energy of activation, and $\nu$, the preexponential factor, as a response to perturbations. If, in a series of closely related activated processes, these parameters exhibit a strong linear correlation, it is expected that an isokinetic relation will occur, then the rates $k$ become the same at a common compensation temperature $T_c$. The reality of these two phenomena continues to be debated as they have not been explicitly demonstrated and their physical origins remain poorly understood. Using kinetic Monte Carlo simulations on a model interface, we explore how site and adsorbate interactions influence the Arrhenius parameters during a typical desorption process. We find that their transient variations result in a net partial compensation, due to the variations in the prefactor not being large enough to completely offset those in $E_a$, both in plots that exhibit a high degree of linearity and in curved non-Arrhenius plots. In addition, the observed isokinetic relation arises due to a transition to a non-interacting regime, and not due to compensation between $E_a$ and $\ln{\nu}$. We expect our results to provide a deeper insight into the microscopic events that originate compensation effects and isokinetic relations in our system, and in other fields where these effects have been reported.Comment: 11 pages, 17 figures, 3 table

Optimal Workfare in Unemployment Insurance

Most workers are only partially insured against unemployment. One reason is that high unemployment compensation creates a free rider problem when monitoring of job search behavior is limited; people who do not seek employment (non-workers) may nevertheless collect unemployment compensation. We show that unproductive workfare for unemployed workers may improve unemployment insurance if workers and non-workers value leisure differently. If they differ only with respect to productivity workfare has to be based on a productivity related task requirement (task workfare); a simple time requirement (time workfare) is not enough. Task workfare is simply a better screening device, also implying that task workfare Pareto dominates time workfare. Finally, we show that the scope for using workfare is larger the smaller are the transfers from workers to non-workers.workfare; unemployment insurance

Dominant Strategies Implementation when Compensations are Allowed:a Characterization Fundación

Dominant strategies truthful implementation of flexible social objectives involves the ability of the planner to alter the individual incentives in such a way that the externality imposed on society by each agent reporting a given type is fully internalized in the agent’s final payoff. In other words, the agents’ objective function must mimic the social objectives. We find that our main result is robust enough to explain why well-known mechanisms like Groves’s transfers work in some contexts while some other social objectives are not implementable in dominant strategies.Individual decisiveness, compensation mechanisms, dominant strategies.

Pengaruh Kompensasi Dan Lingkungan Kerja Terhadap Produktivitas Kerja Karyawan PT. Bpr Restu Artha Makmur Kantor Pusat Majapahit Semarang

BPR Restu Artha Makmur is one of the companies that provide banking services. In order to achieve better corporate goals, management companies need to increase employee productivity. One aspect that can be done is by providing a fair and adequate compensation to all employees and providing a work environment that supports. Although the company has provided good compensation and good working environment, but employee productivity has not maximized yet. Problems in this study were decreased employee productivity seen from the employee's performance appraisal data does not match the target has accepted by the company. Research purposes to determine the effect of compensation and working environment on the productivity of employees. This type of research is explanatory research with a sample of 40 respondents taken by using saturated sampling techniques. Measurement scale with a Likert scale. Data was collected by interview using questionnaires. In the analysis of test data using simple linear regression test and multiple regression test with SPSS 16.0 program. While hypothesis testing using t and F test. The results explain that the compensation provided by corporate was enough good, work environment by corporate was enough good, and work productivity of employees was good. But there are few respondents who said that compensation and working environment that is not good. Compensation has a positive influence to work productivity of employees with a correlation coefficient of 0.683 and coefficient of determination of 46.7%, and the work environment has a positive influence to work productivity of employees with a correlation coefficient of 0.713 and coefficient of determination of 50.9%. Both compensation and work environment together have a significant influence to work productivity of employees with a correlation coefficient of 0.797 and coefficient of determination of 63.5% with the equation Y = 3.942 + 0.541X1 + 0.274X2. Conclusion, compensation and work environment have a positive effect on employee work productivity. There are few employees who claim that the application of the provision of compensation and work environment is poor. Suggestions for the company, should improve good and right providing appropriate compensation and working environment to the employees work productivity better than before

Issues in evaluating tax and payment arrangements for publicly owned minerals

Many developing countries are still heavily dependent on mineral extraction to generate fiscal revenue and to earn foreign exchange. When minerals form a significant proportion of the country's asset base it is particularly important to have a framework to evaluate the adequacy of compensation schemes. Are these countries collecting enough in return for depleting their reserves? Are these countries carrying too much of the risk? This paper describes work in progress in developing such a framework. In many mineral dependent countries, the government holds the mineral rights and enters into compensation agreements with public or private firms that will extract the resources. Given the high degree of risk and uncertainty associated with mineral development, determining tax/payment arrangements is further complicated by the need to develop risk-sharing schemes between government and the resource extractors. This paper reviews these issues briefly and concludes that when objectives are not perfectly correlated it is preferable to use multiple instruments and to match each instrument to an objectives.Economic Theory&Research,Environmental Economics&Policies,Health Economics&Finance,Banks&Banking Reform,Insurance&Risk Mitigation

How Stock Compensation Effects Analyst Projections for New Firms

Stock based compensation has experienced growth as a form of non-cash compensation to employees. Equity compensation is used to align management’s long-term objectives with those of the company. Stock-based compensation gives management incentives to grow the company responsibly over a somewhat longer term versus making short-term decisions to meet bonus requirements. The longer-term incentive is due to the vesting period of stock options. However, many scholars and practitioners, including Warren Buffet, argue stock options provide shorterterm incentives than shares. Current accounting treatment of stock compensation by investors and analysts alike, however, draws the ire of many business world. Analysts treat stock compensation as a non-cash add back to free cash flow and ignore the costs or dilutive effects. Thus, stock compensation is linked to overvaluation (Mohanram, White and Zhao 2020). This study examines whether equity research analysts who treat stock compensation as a pro forma add back to free cash flow produce statistically different price target prices than those who do not. If considering stock compensation explicitly in valuing a firm improves the accuracy of analysts’ valuation, then I expect analysts that adjust for stock compensation have more accurate price targets. Alternatively, adding stock compensation back to calculate free cash flow may inflate valuation because it ignore the true cost of the options. The sample includes reports from analysts covering a subsample of companies in the technology sector. I compare the forecast error of earnings per share and revenue forecasts for analysts who explicitly consider stock compensation relative to those who do not. I find that the accuracy of analysts’ price targets does not differ significantly based upon stock compensation treatment. This finding implies that the overvaluation effects of stock compensation might not be significant enough to result in higher price targets by analysts who adjust for it